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Hormel Foods Corp. (NYSE:HRL) will be reporting its third-quarter 2011 earnings on Thursday, August 25, 2011.

The current Zacks Consensus Estimate for earnings per share (EPS) is 36 cents, representing an annualized growth of 12.70%.

Over the last four quarters, HRL outperformed the Zacks Consensus Estimate three times and matched once. The average earnings surprise was 15.77%.

Second Quarter 2011 Highlights

On May 26, Hormel Foods Corporation posted strong results for the second quarter of fiscal 2011 with an EPS of $0.40, compared with $0.34 in the corresponding period of fiscal 2010. The result was in line with the Zacks Consensus Estimate of $0.40.

Net income reached $109.6 million, up from $91.3 million in the second quarter of 2010. The increase was driven by revenue growth coupled with cost containment.

Net revenues were $1,959.0 million, up 15.3% from $1,699.8 million in the corresponding period of the previous year and $1,816 million as per the Zacks Consensus Estimate. Revenue increased in all segments of the company.

Agreement of Estimate Revisions

In the last 30 days, none of the analysts increased or decreased the company’s earnings per share (EPS) estimates for the third quarter, while one analyst enhanced an estimate for the next quarter. For fiscal 2011, one analyst increased his/her estimate, and one followed a similar trend for fiscal 2012. No analysts decreased their estimates for fiscal 2011 or 2012.

The positive views of the analysts are based primarily on the portfolio of product mix and the rise in prices of its value added products.

Magnitude of Estimate Revisions

Estimates over the last 30 days remained static at 36 cents per share for the third quarter of 2011, representing year-over-year growth of 12.70%.

Estimates for fiscal 2011 also remained static at $1.72 over the last 30 days, while fiscal 2012 marginally increased from $1.79 to $1.80. These estimates represented year-over-year growth of 14.07% and 4.21% for 2011 and 2012, respectively.

Our Take

Hormel is likely to post encouraging results in the third quarter based on the company’s continued acquisitions/ integration, supported by financial flexibility. Moreover, the company’s product value addition, retail penetration, brand building and promotional activities are expected to ensure future expansion

Based in Austin, Minnesota, Hormel Foods Corporation is a leading manufacturer and marketer of various meat and food products in the United States and internationally. The company faces stiff competition from ConAgra Foods Inc. (NYSE:CAG), Kraft Foods Inc. (KFT), and Tyson Foods Inc. (NYSE:TSN).

We currently maintain a long-term Neutral recommendation on the stock. Hormel has a Zacks #2 Rank, which translates into a short-term Buy rating (1-3 months).

Source: Hormel Foods: Earnings Preview